Candlestick Pattern Signals for Long-Only Stock Trading

Summary

This document describes a rule-based candlestick system that uses named reversal patterns to generate entries and exits. Its bullish conditions include morning-star variants, matching lows, and bullish engulfing-style moves; bearish conditions include evening-star variants, matching highs, and bearish reversal patterns. The rules compare open, close, and recent highs or lows using percentage thresholds. A buy signal is issued when a bullish condition occurs and the system has no holding; a sell signal closes an existing position when a bearish condition appears.

The script also calculates a share quantity from a fixed notional amount and the current close. It specifies no market, timeframe, stop loss, or performance results, so the rules cannot be assessed for profitability from this document alone. The bearish condition list repeats the evening-star test and includes a pattern label whose formula appears inconsistent with its name, suggesting the implementation should be checked before use. Costs, slippage, and position sizing risks are not evaluated.

Key ideas

• The system uses threshold-based candlestick patterns to identify potential bullish and bearish reversals.
• Bullish conditions trigger a purchase only when the strategy has no current position.
• A bearish condition triggers a sale of the existing holding.
• The calculated order size targets a fixed cash amount using the current close price.
• The document provides no backtest results, and parts of the condition list may contain implementation errors.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.